Making Tax Digital: Reap benefits beyond filing VAT returnsby
Thomson Reuters’ Steven Smith explains why businesses need to stop shying away from the inevitable and embrace the digital transformation of tax.
It’s been over six months since HMRC’s Making Tax Digital (MTD) for VAT went live, yet recent research by Thomson Reuters has found that 32% of tax professionals are yet to decide what their ultimate software platform and processes for reporting under MTD will be.
The build-up to MTD for VAT was understandably concerning for many organisations, but what is clear from the survey is that with the right technology, tax and finance departments can reap benefits far beyond simply filing VAT returns electronically.
Adopting a complete digital tax reporting software platform gives businesses the visibility of indirect tax across the transaction lifecycle and their wider organisation.
Benefits beyond filing
Indeed, the research found that while many companies have only recently started filing under MTD for VAT, they already acknowledge a number of benefits to being involved in the scheme, such as streamlining tax compliance processes through automation and improved reporting.
Over half (51%) of respondents reported now having simplified or more efficient processes, with 32% saying they now have more accurate VAT returns.
The research also highlighted that perhaps one of the most valuable aspects of reporting under MTD for VAT is that already 19% of companies have found they have better visibility of their tax liabilities so early into the new scheme.
Of those companies with solutions deployed, the research found that only 20% are currently using bridging software, with 35% either using a complete MTD digital tax reporting software platform or they are in the process of transitioning to one by 2020.
Transformation of the tax regime
With tax professionals reporting more accurate VAT returns, surely more companies need to accept that MTD for VAT is just the beginning of the transformation of the UK’s tax regime.
Other taxes are likely to follow suit in the next few years. As such, now is a great opportunity for businesses to learn, plan and invest in their accounting processes and procedures. That way, their clients and partners can be confident that they are prepared for future tax initiatives that HMRC are bound to introduce over the next few years.
By adopting the right technology and software to support the business, they will also have the foresight and flexibility to restructure the indirect tax team.
Being able to forecast and adapt to new legislation with ease will enable the organisation to future proof itself and reduce its reliance on consultants and IT. Furthermore, the ability to support the business during the creation of new operations, M&A activity, or sizable capital purchases means the company can ensure it meets the right tax considerations in a timely manner.
The digitalisation opportunity
The digitalisation of tax is an opportunity for indirect tax teams to adopt a proactive spirit and partner with the broader finance department. Together they can review what technologies other tax teams and larger finance teams are deploying as well as identify where technology is lacking.
Working together will ensure the business benefits from smarter investments in technology that allows its experienced tax teams to focus on more strategic goals rather than being bogged down with manual tasks.